Practice Areas

USTR Releases Summary of U.S. Objectives in Trans-Pacific Partnership

Wednesday, June 04, 2014

Sandler, Travis & Rosenberg Trade Report

Following repeated and widespread calls for more transparency into the Trans-Pacific Partnership negotiations the U.S. is conducting with 11 other countries throughout the Asia-Pacific region, the Office of the U.S. Trade Representative released this week a document outlining the United States’ goals and objectives for this agreement and the main elements of each chapter from the U.S. perspective. USTR emphasizes that many of the elements detailed below are not settled and that there is still work to be done to achieve them among fellow participants Australia, Brunei Darussalam, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam.

Trade in Goods

- elimination of tariffs and commercially meaningful market access for U.S. products exported to TPP countries

- elimination of tariffs on textile and apparel exports to TPP countries

- a yarn forward rule of origin, which requires that textile and apparel products be made using U.S. or other TPP country yarns and fabrics to qualify for TPP benefits

- a carefully crafted short supply list, which would allow fabrics, yarns and fibers that are not commercially available in the U.S. or other TPP countries to be sourced from non-TPP countries and used in the production of apparel in the TPP region without losing duty preference

- strict enforcement provisions and customs cooperation commitments that will provide for verification of claims of origin or preferential treatment and denial of preferential treatment or entry for suspect goods if claims cannot be verified

- a textile-specific safeguard mechanism that will allow member countries to reimpose tariffs on certain goods if a surge in imports causes or threatens to cause serious damage to domestic producers

Services

- liberalized access for services companies so they receive better or equal treatment to suppliers from TPP countries’ other FTA partners

- provisions that would enable companies to supply services without establishing an office in every TPP country

- new or enhanced obligations in specific sectors important to promoting trade (e.g., enhanced disciplines for express delivery services)

- commitments to liberalize foreign financial services and insurance markets while protecting a government’s broad flexibility to regulate, including in the financial sector, and to take the actions necessary to ensure the stability and integrity of a financial system

Investment

- liberalized access for investment in TPP markets, non-discrimination and the reduction or elimination of other barriers to the establishment and operation of investments in TPP countries, including prohibitions against unlawful expropriation and specified performance requirements

- provisions that will address measures that require TPP investors to favor another country’s domestic technology in order to benefit state-owned enterprises, national champions or other competitors in that country

- procedures for arbitration that will provide basic rule of law protections for U.S. investors operating in foreign markets similar to those the U.S. already provides to foreign investors operating in the U.S. (including an array of safeguards designed to raise the standards around investor-state dispute settlement, such as by discouraging and dismissing frivolous suits, allowing governments to direct the outcome of arbitral tribunals in certain areas, making proceedings more open and transparent, and providing for the participation of civil society organizations and other non-parties)

Customs, Trade Facilitation and Rules of Origin

- commitments that will ensure the quick release of goods through customs, expedited procedures for express shipments, advance rulings, and transparent and predictable customs regulations

- strong customs cooperation commitments to ensure that TPP countries work together to prevent smuggling, illegal transshipment and duty evasion and to guarantee compliance with trade laws and regulations

- strong and common rules of origin to ensure that the benefits of TPP go to participants and that TPP promotes the development of supply chains in the region

Labor

- requirements to adhere to fundamental labor rights as recognized by the International Labor Organization, as well as acceptable conditions of work, subject to the same dispute settlement mechanism as other obligations in TPP

- rules that will ensure that TPP countries do not waive or derogate from labor laws in a manner that affects trade or investment, including in free trade zones, and that they take initiatives to discourage trade in goods produced by forced labor

- formation of a consultative mechanism to develop specific steps to address labor concerns when they arise

- establishment of a means for the public to raise concerns directly with TPP governments if they believe a TPP country is not meeting its labor commitments as well as requirements that governments consider and respond to those concerns

Environment

- strong and enforceable environment obligations subject to the same dispute settlement mechanism as other obligations in TPP

- commitments to effectively enforce domestic environmental laws, including laws that implement multilateral environmental agreements, and commitments not to waive or derogate from the protections afforded in environmental laws for the purpose of encouraging trade or investment

- establishment of a means for the public to raise concerns directly with TPP governments if they believe a TPP member is not meeting its environmental commitments and requirements that governments consider and respond to those concerns

- non-discriminatory treatment of digital products transmitted electronically and guarantees that these products will not face government-sanctioned discrimination based on the nationality or territory in which the product is produced

- requirements that support a single, global Internet, including ensuring cross-border data flows, consistent with governments’ legitimate interest in regulating for purposes of privacy protection

- rules against localization requirements that force businesses to place computer infrastructure in each market in which they seek to operate

- provisions promoting choice of technology and competitive alternatives to address the high cost of international mobile roaming

Competition Policy and State-Owned Enterprises

- basic rules for procedural fairness on competition law enforcement

- commitments ensuring that SOEs act in accordance with commercial considerations and compete fairly, without undue advantages from the governments that own them, while allowing governments to provide support to SOEs that provide public services domestically

- rules that will provide transparency with respect to the nature of government control over and support for SOEs

- commitments that obligate countries to seek to achieve balance in their copyright systems by means of, among other approaches, limitations or exceptions that allow for the use of copyrighted works for purposes such as criticism, comment, news reporting, teaching, scholarship and research

- pharmaceutical IP provisions that promote innovation and the development of new, lifesaving medicines, create opportunities for robust generic drug competition, and ensure affordable access to medicines, taking into account levels of development among the TPP countries and their existing laws and international commitments

- new rules that promote transparency and due process with respect to trademarks and geographical indications

- commitments aimed at adopting common approaches to regulatory matters related to trade in products in key sectors such as wine and distilled spirits, medical devices, cosmetics, pharmaceuticals, information and communication technology, and food formulas

- new and enforceable rules to ensure that science-based SPS measures are developed and implemented in a transparent, predictable and non-discriminatory manner, while at the same time preserving the ability of regulatory agencies to do what they deem necessary to protect food safety and plant and animal health

- establishment of an ongoing mechanism for improved dialogue and cooperation on addressing SPS and TBT issues

Transparency

- commitments to promote greater transparency, participation and accountability in the development of regulations and other government decisions, including by promptly publishing laws, regulations, administrative rulings of general application, and other procedures that affect trade and investment, and providing opportunities for stakeholder comment on measures before they are adopted and finalized

- a chapter on regulatory coherence, including commitments on good regulatory practices (a first for a U.S. trade agreement)

- commitments discouraging corruption and establishing codes of conduct to promote high ethical standards among public officials

Government Procurement

- creation of fair, transparent, predictable and non-discriminatory rules to govern government procurement in TPP countries

- commitments to liberalize TPP countries’ government procurement markets, with comparable levels of coverage by all TPP countries, taking into account the particular sensitivities of specific countries

Development and Capacity Building

- agreement on cooperative development activities TPP countries could conduct to promote broad-based economic growth and sustainable development, including public-private partnerships, science and technology cooperation, and other joint development activities

- mechanisms for collaboration and facilitation of capacity-building activities by both TPP government and non-government representatives as well as the private sector

Dispute Settlement

- establishment of a fair and transparent dispute settlement mechanism that applies across the agreement

- procedures to allow disputes on matters arising under TPP to be settled in a timely and effective manner

Japan

- enforceable commitments related to the automotive sector that will address a broad range of non-tariff measures, including those related to regulatory transparency, standards, certification, financial incentives and distribution

- establishment of an accelerated dispute settlement procedure that would apply to the automotive sector that includes a mechanism to “snap back” tariffs as a remedy, as well as a special motor vehicle safeguard